How to Start a Service Business: A Complete Guide

Choose what type of service business to start

Chances are, if you’re considering starting a service business, you already specialize in a specific area. For example, do you have experience cleaning homes or have you worked in pest control before?

Ideally, you’ll have knowledge of or experience in the industry you want to start a business in before you branch out on your own. It’s important to understand the factors that will impact and influence your business, such as: 

• The services you want to offer
• Who your target customers are
• What equipment or materials you need
• Who local competitors are

If possible, choose an industry you’re familiar with so you can hit the ground running. And, if you already know what you want to do, take a look at our industry-specific guides to see if we have one for the type of service you plan to offer:

2. Write a business plan

A business plan helps to organize your vision on paper. And, they’re often required by lenders before they’ll consider funding your venture.

You can use a free template to create your business plan or draft one yourself. Either way, it should include the following elements: 

• A cover page with your business name and logo 
• A table of contents 
• An executive summary outlining your plan, including how much funding you need and what your competitive advantages are
• A business overview introducing your business and explaining what you’ll provide, why, and to who
• A services list showing which services you’ll offer to your customers
• A pricing strategy, including prices for each of your services
• A market analysis showing what the income potential is in your service area
• A competitive analysis outlining competing businesses and what makes you stand out
• A marketing plan showing how you’ll reach ideal customers, including channels and costs
• Any employee planning you’ve done, showing what roles you’ll hire for and when
• Your financial projections, including how much you predict you’ll make in the first year, what you can afford to spend on new equipment, and what you plan to pay yourself

While you may not have all this information from day one, it’s all relevant to getting a clear picture of what you what your service-based business to be long-term. Remember that it’s a working document that you can update, change, and revisit as necessary.

Even if you don’t need a lender—or your lender doesn’t require a business plan—it’s still a good idea to create one. It will encourage you to focus on how you want to grow your business and what it will take to scale efficiently so that you can set reasonable goals. 

READ MORE: How to create a small business budget

3. Get trades certified or learn on the job

Depending on the services you want to offer, you may need to get skilled trades certification or licensing before you can legally start doing business. 

Trade certifications and licensing requirements also vary by state, so it’s important to take a look at the restrictions where you live before you dive in. For example, here’s how some states differ in terms of industry requirements: 

• Electrical: In Texas, a Texas electrician license is required, but there are some exemptions for professionals working in areas like agriculture or appliance repair. On the other hand, you’ll need an electrician license in Massachusetts to perform any electrical work at all.
• HVAC: An HVAC license in Florida can be for a registered or certified contractor, which determines where in Florida you can work independently. However, if you’re getting a Texas HVAC license, becoming a registered or certified technician still requires you to work under the supervision of a licensed contractor, meaning you can’t run your own business.
• Plumbing: North Carolina plumbing licenses include three license types and two technician sublicenses based on the type of work you want to offer. Illinois plumbing licenses are similar, but they also offer a retired plumber license as proof of education for plumbers aged 62+.
• Handyman: You don’t need a handyman license in California, but you can’t take on projects over $500. Handyman licensing in Florida is a little different—there’s no project value cap, but you need a contractor’s license for trade work like plumbing and electrical.

For the most part, if you’re doing a skilled trade you’ll need to pass a certification exam to become a certified journeyperson (or, in some areas, a registered apprentice). 

For example, you may be required to have plumbing certification, HVAC certification, or appliance repair certification to offer those services in your state. 

Other businesses, like cleaning or lawn care, don’t typically require any special licensing or certifications. They’re quick to start and don’t necessitate any formal skills training. All you need is some equipment and a good work ethic to get started.

4. Price your services 

Once you know the industry you plan to build a business in, and you have a list of services you want to offer, it’s time to price them. 

First, take the list of services you plan to offer and add a description to each item, including:

• An estimate of how long the service will take
• If it requires any materials 
• What equipment you’ll need 

From there, you can start to price your services by choosing a pricing model. You can either go with whatever’s most popular in your industry or choose a standard pricing strategy, such as: 

• Hourly rate: Charge your customers per hour of service
• Flat rate: Charge a flat rate for a job or unit
• Square footage: Charge per square footage of job space

Whichever pricing model you choose, make sure to factor in labor costs, overhead, expenses, markup, and a profit margin so that each job is profitable.

5. Get business financing

PlPlenty of entrepreneurs need small business funding to get up and running. If you’re one of them, check out the following options to secure the capital you need to build your business: 

Government funding

The U.S. Small Business Administration (SBA) offers several funding programs, like small business loans and investment capital. The Government of Canada also offers business grants and financing.

Business loans

Head over to your local bank and apply for a small business loan or line of credit that you can pay back later. You may also be able to get a startup loan from someone you know, like a friend or family member who wants a stake in the business.

Credit cards

Many entrepreneurs get a business credit card to help with cash flow during the startup phase. Choose a card with a low interest rate and a rewards program for every dollar spent. Make sure to pay off the card every month, too.

Jobber Grants

The Jobber Grants program offers $150,000 in available funding to recognize excellence in small home services businesses.

Equipment financing

Depending on where you buy your equipment, you may be able to get financing on larger purchases. You can also buy used equipment to cut down on costs.

Pro Tip: Open a business bank account to keep your personal and company finances separate. This makes filing your taxes a lot easier down the road.

READ MORE: 30 small business tax deductions to save money when filing

6. Name, register, and license your business

To legally start your home service business, you’ll need to choose a business name, register your business, and get a business license. Here’s how:

Pick a business name

Your business name plays a huge role in building your brand. It’s one of the most recognizable parts of your service business. Take your time and choose one that’s unique, easy to remember, and helps you to stand out from the competition. 

Remember, you’ll also need to create a logo to go with your name, so pick something that will be easy to create a design around.

7. Get small business insurance

Small business insurance will protect your business in case of accidents or unexpected problems. Even more importantly, some states require you to have it to legally run your business. 

To start, you’ll need the following insurance coverage, which you can bundle together as a business owner’s insurance policy:  

• General liability insurance to cover property damage and personal harm
• Commercial property insurance for any damage to your office or equipment
• Business income insurance to keep you running after an incident or disaster

You can also get additional insurance policies to provide coverage specific to your industry and services, like:

• Commercial auto insurance for company vehicles
• Workers’ compensation insurance in case an employee is injured on the job
• Professional liability insurance to cover claims and lawsuits over professional mistakes
• Product liability coverage if you make or distribute your own products
• Employment practices liability insurance for claims related to hiring, managing, and firing workers
• Crime insurance to keep your business stable after criminal situations
• Cyber liability insurance in case of a security breach or private data leak
• Key person insurance to keep the company running if you physically can’t work anymore
• Commercial umbrella insurance for extra coverage on your other policies

Need more information about industry-specific insurance? Find out about cleaning insurance, HVAC insurance, and snow plow insurance.

8. Market your service business

With all of the big tasks out of the way, it’s time to start developing a client list. Marketing is the best way to get the word out about your new business, and some of the best (and easiest) ways to get started include: 

• Social media: Social media is a common marketing space for home service professionals. Set up a Facebook business page, Twitter profile, or Instagram account, depending on where your ideal customers spend time online.
• Website: Build a service business website where a potential customer can learn about your business, see photos of completed jobs, and book services online.
• Online business directories: List your business on Google Business, Yelp for Business, Bing Places, and other online directories where potential customers search for service providers.
• Lead generation: Try out free or paid lead generation tools to attract new leads. 
• Networking: Network with other business owners and reach new customer groups by attending community events, joining your local business association, and promoting your business every chance you get.
• Word of mouth: Word of mouth is the top marketing channel for home service businesses. Start a customer referral program and ask every happy customer to leave you an online review.
• Advertise: Try getting business cards, vehicle wraps, uniforms, and investing in door hangers, flyers, and postcards to spread the word. Or, try online ads through Google or Facebook. 

You can also take a look at our industry-specific marketing guides for more tailored tips:

9. Grow your service business

After starting a service business, your goal should be to grow. But what that means for you may be different than someone else. Service businesses can grow in many ways, including: 

• Hiring employees who can help with (and eventually take over) day-to-day work. As a small business owner, hiring your first employee gives you the freedom to work on your business instead of in it. 
• Expanding your customer base by reaching new customers in a new market by offering services tailored to a different demographic. For example, as a cleaning company, you can also offer laundry services to busy clients.
• Learning through professional development resources like books and podcasts, as well as educational events like Jobber Summit. This will help you develop skills like time management, financial literacy, leadership, team building, and more.
• Developing systems and standard operating procedures that will help your business run better, prevent costly mistakes, and allow you to make more money with less effort. 

Even if you don’t have any experience in the service industry, starting—and growing—a service business isn’t out of reach. With the right mindset and goals, just about anyone can do it.

Learn how to get started with advice from experienced entrepreneurs in this episode of Ask a Business Mentor: